BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 598|
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THIRD READING
Bill No: SB 598
Author: Costa (D)
Amended: As introduced
Vote: 21
SENATE ENVIRONMENTAL QUALITY COMMITTEE : 9-0, 4/19/99
AYES: Sher, Alpert, Alarcon, Chesbro, Hayden, McPherson,
O'Connell, Rainey, Wright
NOT VOTING: Solis
SENATE APPROPRIATIONS COMMITTEE : 11-0, 5/10/99
AYES: Alpert, Bowen, Escutia, Johnson, Karnette, Kelley,
Leslie, McPherson, Mountjoy, Perata, Vasconcellos
NOT VOTING: Johnston, Burton
SUBJECT : Underground storage tank cleanup claims:
Deductible
SOURCE : California Independent Oil Marketers
Association
DIGEST : This bill authorizes the State Water Resources
Control Board to waive the double deductible that is
otherwise charged an owner of a leaking tank who did not
obtain a permit by January 1, 1990, if the tank is located
in a county that failed to implement the underground
storage tank permitting program before January 1, 1990.
ANALYSIS : Existing law:
CONTINUED
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1.Requires owners of leaking petroleum underground storage
tanks to take appropriate corrective action to clean up
the contamination caused by leaked fuel.
2.Establishes the Underground Storage Tank Cleanup Fund,
the revenues for which are derived from a 1.2
cents/gallon fee imposed on each gallon of vehicle fuel
placed into underground tanks. The underground storage
tank fee raises about $160 million each year. Owners of
leaking tanks that are required to take corrective action
may make claims for reimbursement from the cleanup fund.
The fund will reimburse owners for the cost of corrective
action up to $1 million per leaking tank case, less a
deductible. The deductible varies as follows:
A. For homeowners who own tanks the deductible is
waived.
B. For small businesses and governmental agencies with
a budget of $7 million or less the deductible is
$5,000.
C. For businesses or governmental agencies with less
than 500 employees, the deductible is $5,000.
D. For all other claimants the deductible is $10,000.
3.Requires claimants for reimbursement to meet specified
eligibility requirements, one of which is a requirement
that the claimant obtained a permit to operate the tank
by January 1, 1990. This eligibility requirement may,
however, be waived by the State Water Resources Control
Board if it makes three findings: (a) that the claimant
was unaware of the permit requirement and had no intent
to avoid it, (b) that prior to making a claim for
reimbursement, the claimant obtained the permit, and (c)
that all permit and underground storage tank fees that
were avoided because the owner failed to obtain a permit
have been retroactively paid. If the three findings are
made by the board and the eligibility requirement is
waived, the claimant who failed to obtain a permit is
required to pay double the deductible the claimant
otherwise would be required to pay towards the cost of
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cleaning up the claimant's tank.
Comments
According to the Senate Environmental Quality Committee
analysis:
1. Purpose of Bill . The underground storage tank regulatory
program that requires owners of tanks to obtain operating
permits issued by counties or cities was enacted by AB
1362 (Sher) in 1983. Even six years following the
enactment of that program, however, there were apparently
counties that had failed to implement the permit program.
Where this occurred, and to the extent it occurred, it
poses a problem for a leaking tank owner who is seeking
reimbursement for leaking tank cleanup costs from the
Underground Storage Tank Cleanup Fund. Because there was
no actively implemented permit program in the county
where the tank was located, the owner could not have
obtained an operating permit prior to that date even if
he or she had wanted to. Under these circumstances, the
sponsors of this bill argue, it is not fair to require
owners of leaking tanks to pay a double deductible on
their claims for reimbursement when they would have been
subject to only the normal deductible had they been
located in a county with an active permit program.
This bill allows an owner of a tank located in a county
where a tank permit program was not implemented by
January 1, 1990, to pay the normal deductible applicable
to the owner's class rather than being required to pay
the double deductible.
2. Number of Cases to Which This Bill Applies . This bill is
sponsored by the California Independent Oil Marketers
Association (CIOMA). The association states there are
tank owners in three Central Valley counties that have
been forced to pay the double deductible for their
leaking tank cleanup costs because the counties failed to
establish tank permit programs in a timely fashion. The
three counties are not identified in CIOMA's supporting
material but the association believes about 250 tank
owners have been or are in this situation. Rather than
deductibles of $5,000 or $10,000, their deductibles
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instead were, or will be, $10,000 or $20,000.
According to the state board, the Underground Storage Tank
Cleanup Fund does not track cases where the double
deductible was applied because claimants failed to obtain
permits for their tanks by January 1, 1990. The state
board estimates, however, that about one-third of the
3,150 small business claims for reimbursement and
one-fifth of the 2,457 medium-sized business claims for
reimbursement have involved waivers of the permit
eligibility requirement and the application of the double
deductible. Some proportion of these claims would have
come from counties where permit programs were not
operating before January 1, 1990. These latter claims
would be eligible for the double deductible
waiver enacted by this bill. For practical purposes, the
state board suggests, though without supporting data,
that this bill will probably not affect more than ten
claims.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee analysis:
Fiscal Impact (in thousands)
Major Provisions 1999-2000
2000-01 2001-02 Fund
Double deduction Unknown,
potentially $0 to $100 one Special*
exemption time loss of revenue
*Underground Storage Tank Cleanup Fund
SUPPORT : (Verified 5/11/99)
California Independent Oil Marketers Association (source)
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CP:kb 5/12/99 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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